Facebook is in a very vulnerable position right now, from a litigation point of view, as it is now in its SEC mandated quiet period right before its much awaited $100 billion IPO, and also because it hardly has many patents to defend itself against patent trolls and aging internet giants like Yahoo looking to make a quick buck by suing the hell out of more successful, but younger players who don’t have a huge patent portfolio to defend themselves.
It recently acquired 750 patents from IBM, primarily to defend itself against such litigation, but that may not be enough, and it may need to buy some more.
On the other hand, you have AOL, a dying relic of the dot-com bubble. Its market cap has shrunk to a fraction of its market cap in its glory days, and the value of its business may possibly be less than its patent portfolio.
It has 700-800 really important patents according to its CEO, with half of them incredibly important for internet users. This could be the ideal patent portfolio for Facebook, as it has a lot of patents related to fundamental internet technologies, IM, email, webpage rendering, search engine technology etc.
While AOL seems to think that the value of its patents is more than $1 billion, a patent advisory firm has estimated its value at only around $290 million. This could make it a very easy purchase for Facebook, which has around $4 billion in cash and marketable securities, and is set to raise another $5 billion in its IPO.